Cat Financial Announces Second Quarter 2017 Results

July 25, 2017

Cat Financial Announces Second-Quarter 2017 Results

Cat Financial reported second-quarter 2017 revenues of $676 million, an increase of $17 million, or 3 percent, compared with the second quarter of 2016. Second-quarter 2017 profit was $114 million, a $12 million, or 12 percent, increase from the second quarter of 2016.

The increase in revenues was due to a $14 million favorable impact from lending activity with Caterpillar, a $13 million favorable impact from higher average financing rates and an $8 million favorable impact from returned or repossessed equipment. These favorable impacts were partially offset by an $18 million unfavorable impact from lower average earning assets.

Profit before income taxes was $164 million for the second quarter of 2017, compared with $148 million for the second quarter of 2016. The increase was primarily due to a $20 million decrease in provision for credit losses, a $10 million favorable impact from miscellaneous revenue items primarily due to lending activity with Caterpillar and an $8 million favorable impact from returned or repossessed equipment. These favorable impacts were partially offset by a $12 million increase in general, operating and administrative expenses primarily due to higher incentive compensation and a $9 million unfavorable impact from lower average earning assets.

The provision for income taxes reflects an estimated annual tax rate of 30 percent in the second quarter of both 2017 and 2016.

During the second quarter of 2017, retail new business volume was $2.69 billion, a decrease of $367 million, or 12 percent, from the second quarter of 2016. The decrease was primarily related to lower volume in North America, Mining and Latin America, partially offset by an increase in Asia/Pacific.

At the end of the second quarter of 2017, past dues were 2.71 percent, compared with 2.93 percent at the end of the second quarter of 2016. Write-offs, net of recoveries, were $26 million for the second quarter of 2017, compared with $33 million for the second quarter of 2016.

As of June 30, 2017, the allowance for credit losses totaled $338 million, or 1.25 percent of finance receivables, compared with $346 million, or 1.25 percent of finance receivables at June 30, 2016. The allowance for credit losses at year-end 2016 was $343 million, or 1.29 percent of finance receivables.

"Cat Financial’s solid business performance during the quarter was driven by continued strong portfolio health," said Dave Walton, president of Cat Financial and vice president with responsibility for the Financial Products Division of Caterpillar Inc. "The global Cat Financial team remains committed to helping Caterpillar customers and Cat dealers succeed through financial services excellence."

For over 35 years, Cat Financial, a wholly owned subsidiary of Caterpillar Inc., has been providing financial service excellence to customers. The company offers a wide range of financing alternatives to customers and Cat dealers for Cat machinery and engines, Solar® gas turbines, and other equipment and marine vessels. Cat Financial has offices and subsidiaries located throughout North and South America, Asia, Australia and Europe, with its headquarters in Nashville, Tennessee.